9.

Wingate Company, a wholesale distributor of electronic equipment, has been experiencing losses for some time, as shown by its most recent monthly contribution format income statement: Sales Variable expenses Contribution margin Fixed expenses Net operating income (loss) $ 1,554,000 545,180 1,008,820 1,110,000 $ (101,180) In an effort to resolve the problem, the company would like to prepare an income statement segmented by division. Accordingly, the Accounting Department has developed the following information: Division Central $ 680,000 East $ 354,000 478 $260,000 Sales Variable expenses as a percentage of sales Traceable fixed expenses 328 West $520,000 31% $194,000 $329,000 Required: 1. Prepare a contribution format income statement segmented by divisions. 2-a. The Marketing Department has proposed increasing the West Division's monthly advertising by $24,000 based on the belief that it would increase that division's sales by 17%. Assuming these estimates are accurate, how much would the company's net operating income increase (decrease) if the proposal is implemented? 2-b. Would you recommend the increased advertising? Complete this question by entering your answers in the tabs below. Reg 1 Reg 2A Req 2B Prepare a contribution format income statement segmented by divisions. Division Central Total Company East West